Saturday, January 15, 2005
Where's Your Money?
Lose $100,000 a year on Social SecurityIncome should go up, not down, upon retirement
Friday January 14, 2005
When a person retires, should his income go up or should it go down? I am not asking what will happen, but rather what should occur.
The answer is that after socking away $1 of every $10 they earn for nearly 40 years, Americans should reap big rewards. They should have huge nest eggs after all those years.
A conservative investment of half corporate stocks and half government bonds would yield returns of over 6 percent. At that rate, people should expect to receive pensions bigger than their final paychecks.
Instead, Americans can expect a rate of return from Social Security of less than 3 percent.
The difference between those two rates of return may seem slight, but it is the difference between Boardwalk and Mediterranean Avenue.
The Heritage Foundation, a conservative group, posted a calculator online that allows people to calculate how badly they will be beaten by Social Security -- http://www.heritage.org/research/features/socialsecurity/.
Social Security will shortchange the average 51-year-old woman by more than $3,000 a month.
Instead of pulling down $52,000 a year when she retires -- nearly double the average woman's income at 51 today -- she will have to scrape by on $15,000, about half that average income.
Men do even worse. The average 51-year-old male will be shortchanged by $5,354 a month.
The investment in Social Security will cost the average wife and husband, ages 51, more than $100,000 a year when they retire.
That couple's 21-year-old son will fare even worse than we will. His rate of return will be a negative 0.85 percent. That means for every $100 he puts in today, he will draw down $99.15 some 46 years from now.
Adjusted for inflation, he'd better learn how to cook catsup soup.
Multiply that a few million times and one can see that the politicians have cost American workers trillions of dollars.
Social Security is a broken relic of the Roosevelt administration that should have been modernized years ago.
Instead of fixing it in the 1960s, Lyndon Johnson made things worse by lowering the retirement age. Ronald Reagan shuffled the problem off to the future simply by raising the tax.
Under Social Security, a worker now gives the government 10.6 percent of his income (that includes the employer match). The government uses the money to pay today's retirees instead of socking it away.
President Bush wants to change that by allowing American workers to invest some of their Social Security taxes if they want.
Led by the AARP, the reactionary left is going bonkers. Lefties want to keep the status quo.
They mock Bush. They mock his plan. They trot out tired scare tactics designed to chase off those whose only knowledge of the stock market is that it crashed in 1929.
Baby boomers know better. My 401(k) should pay me more than Social Security. I pay in less than I pay Social Security and I have been in it only since 1986. I survived Black Friday in 1987 and the dot.com bust.
There are millions of people like me. We have seen what conservative investments can do. We want personal investment accounts.
We want to retire on what we have earned, not what the government parcels out.
That means retiring on more, not less.
Don Surber can be reached at email@example.com.
This article should be required reading for every America over the age of 20! If so we would have Social Security Reform by mid-summer.
I reviewed an extensive research report by David John of the Heritage Foundation, http://www.heritage.org/Research/SocialSecurity/bg1811.cfm
Mr. John put forth a reasonable reform program, which would be deemed "destroying social security" by the Democrats if purposed by President Bush.
As I see it, Bloggers will have to carry-the-water on this topic once the MSM starts "mis-reporting" the facts concerning social security and any proposal to reform it.
For I believe we have no choice but to reform it some day and with a republican in his second term in the White House, who is promoting an "ownership" society for American -- the time is NOW!
If you have a moment, please have a look at my american society of consultant pharmacists site.